MANILA, Philippines — Term deposits yesterday fetched higher rates across the board after the Bangko Sentral ng Pilipinas (BSP) lifted benchmark rates for the first time in more than three years to curb rising inflation.

The seven-day term deposits fetched a higher rate of 3.5123 percent from 3.4273 percent last week, while the yield of the 14-day tenor rose to 3.5855 percent from 3.4551 percent.

Likewise, the 28-day term deposits fetched a higher rate of 3.4979 percent from last week’s 3.4732 percent from 3.4650 percent.

“The banks are still reportedly calibrating their bids in terms of rates given the shift in monetary stance,” BSP Deputy Governor Diwa Guinigundo said.

Last May 10, the BSP’s Monetary Board raised interest rates by 25 basis points as latest forecasts have further shifted higher, indicating that inflation pressures could become more broad-based over the policy horizon.

This brought the overnight deposit facility to 2.75 percent, the overnight reverse repurchase facility to 3.25 percent, and the overnight lending facility to 3.75 percent.

Inflation rose up to a fresh five-year high of 4.5 percent in April from 4.3 percent in March due to rising oil prices and the impact of the implementation of Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

This brought the average inflation to 4.1 percent in the first four months, exceeding the two to four percent target set by the central bank.

Monetary authorities believe the rate hike would help arrest potential second-round effects by tempering the buildup of inflation expectations as the balance of risk to the outlook continues to lean toward the upside with price pressures emanating from possible adjustments in transport fares, utility rates, and wages.

Banks swarmed the term deposit auction facility (TDF) yesterday as bids for the three tenors reached P130.51 billion or P50.51 billion higher than the volume of P80 billion as liquidity starts to return to the market.

Tenders for the P40 billion seven-day term deposit offering amounted to P64.09 billion, while the 14-day tenor was likewise oversubscribed at P44.69 billion versus the issue size of P30 billion.

Likewise, bids for the 28-day term deposits reached P21.73 billion or more than two times the volume of P10 billion.

Guinigundo said liquidity in the financial system is normalizing after the holidays last May 1 for the Labor Day and last May 14 for the barangay and Sangguniang Kabataan elections.

He also cited the liquidity impact of foreign portfolio investments as latest data released by the BSP showed a net inflow of $749.43 million in the first quarter of the year, reversing the net outflow of $567.53 million in the same quarter last year.